Top 5 Myths About Credit Card Processors

June 6, 2013

It’s no secret that credit card processing is not a favorite topic of my business owners. Yet in the current economy consumers are trending toward more of a “cashless” society. Even more, most credit cards now offer some sort of incentive, such as rewards or points, so more consumers are using cards even for minor transactions. So it is important for merchants to be able to separate the facts about the industry versus myths that have been created. This knowledge can help the overwhelmed business owner really have an impact on the bottom line. The following are some of the most infamous myths that many merchants believe to be fact.

Accepting cards is too expensive

Back in the dark ages of credit card processing, there existed just three rates. Whether taking a Visa, MasterCard, or AMEX each had their own set rate. It was a simpler time but many businesses were left wondering if the system could be improved. The truth is that with the current interchange system there are something around 400 rates depending on the card. While this may seem backwards, it actually benefits the business because it assigns each card a respective rate dependent on risk and benefits to the cardholder. A card present debit card transaction is at a much lower rate than a card not present business rewards card. This transparent pricing shows what interchange is on every transaction as opposed to one flat rate.

You must sign a contract to get the best rates

This is one of my favorites. Most merchants are told that they must sign an agreement with a 36-month or longer term in order to be given the best rate. At Host Merchant Services, we do not believe in holding businesses financially hostage and locked into a term contract. Our goal is to provide the best service and lowest rate and to earn each and every one of our clients business on a month to month basis. The real goal behind these contracts is to ensure consistent monthly revenue for the processor and to punish the merchant if they choose to leave. This brings me to the next myth…

Hefty early termination fees

More often than not, when a contract is signed for a term, there is a large early termination fee if the services are stopped before the end of the term. This is found in other industries as well, like personal cell phones. This financial penalty often keeps merchants in an undesirable setup even if they are unhappy and WANT to switch. Many times this is coupled with another misleading stipulation…

Terminals must be leased or purchased

Wrong. Leasing a terminal for hundreds of dollars a month is one of the most disingenuous ways processors take advantage of businesses. Often times after just a few months, the business has paid out the actual value of the terminal if it was bought outright. At HMS we “lend” the terminal for use by the merchant as long as they are doing business with us. If they stop processing with us, we just ask to have the machine returned. That simple. Oh and did I mention we also provide free paper?

It takes too long to get your money

Quite the opposite actually. We can provide 24-hour funding when batches are complete by a certain time. This is a vast improvement from the up to 72-hour or more time frame that other providers hold your money.

It is easy for entrepreneurs to feel mislead and lost in the minefield that is the payment processing industry. Contact one of our knowledgeable merchant specialists today so that Host can guide you safely through the field and to industry leading payment processing.


Save Time, Money, & Resources

Categories: Customer Service

Get Started

Ready for the ultimate credit card processing experience? Fill out this form!

Contact HMS

Ready for the ultimate credit card processing experience? Ask us your questions here.